City of Rosenberg DEBT SERVICE FISCAL YEAR 2016 BUDGET JULY 28,

Legal Debt Margin Under State Finance law, the City’s outstanding debt shall not exceed 10% of total assessed value. ◦Assessed Value$ 2,098,372,112 ◦10% of Assessed Value$ 209,837,211 ◦Rosenberg’s Outstanding Debt (principal only)$ 62,791,922 or 3.0% ◦Rosenberg’s Proposed Outstanding Debt $ 82,791,922 or 3.9% Texas Constitution states that “no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent of the Tax Rate to Achieve Maximum Tax Revenue $2.50 ◦Rosenberg’s Current Tax Rate $0.49 According to the Texas Municipal League (TML) debt survey, despite this broad authority, the average city property tax rate for cities responding to the survey are as follows: ◦Population greater than 5,000 (209 cities)$0.539 ◦Population greater than 20,000 (73 cities)$0.57 ◦Population between 30,000 and 40,000 (12 cities)$

Debt Service Fund – Total CURRENT Obligations Debt Requirements per Year ◦2016 6,892,827 ◦2017 6,699,749 ◦2018 5,833,706 ◦2019 5,644,514 ◦2020 5,630,652 ◦2021 5,279,138 ◦2022 4,942,993 ◦2023 4,918,381 ◦2024 4,704,994 ◦2025 4,564,363 ◦2026 4,563,909 ◦2027 4,560,742 ◦2028 3,949,024 ◦2029 3,111,095 ◦2030 2,659,688 ◦2031 1,684,215 ◦2032 1,675,416 ◦2033 1,241,400 ◦ ,213 ◦Total $79,198,019 Debt by Issue ◦2006 CO 4,021,556 ◦2007 GO 2,952,170 ◦2007 CO 4,475,777 ◦2008 CO 5,817,119 ◦2008A CO 1,943,619 ◦2009 CO 1,611,494 ◦2009 GO 5,233,590 ◦2010 GO 2,938,091 ◦2010A CO 3,109,756 ◦2010B CO 7,908,495 ◦2010C CO 1,601,663 ◦2011 GOR 2,677,500 ◦2012 CO 9,117,666 ◦2012 A CO 1,074,175 ◦2012 GOR 1,378,500 ◦2013 CO 10,260,400 ◦2013 A CO 576,808 ◦2014 GO 1,985,950 ◦2014 CO 6,437,494 ◦2014A CO 3,914,175 ◦2004 SIB 162,022 ◦Total $79,198,019 3 Includes Principal and Interest

Current Debt Obligations - Principal and Interest 4

Sources for 2016 Debt 2016 Proposed Debt Requirement Including Principal & Interest and Proposed Debt Issue in FY2016 $7,642,826 Debt Fund Property Taxes $4,403,000 (58%) Water/Wastewater Fund $2,315,663 (30%) RDC $794,991 (10%) Hotel/Motel Fund $62,437 (1%) Subsidence Fund $63,145(1%) 5

Key Points Regarding Current Debt  Scheduled annual payments reduce the City’s outstanding debt (principal) by an average of $4.8 million per year for the next two years.  Based on the current debt schedules, annual debt service requirements (principal and interest) will decrease by approximately $200,000 in FY2017, and $900,000 in FY2018 due to the retirement of debt issues.  The City’s outstanding tax supported debt was most recently rated “Aa3” by Moody’s and increased to “AA-” by Standard and Poor’s, further indicating the City’s fiscal stability and highlighting the City’s very strong creditworthiness. 6

Debt Service Fund Balance  Financial policies recommend a minimum Fund Balance of 67% of Annual Debt Obligations be maintained as City policy.  Current Annual Debt Obligations for FY2015 are $6,892,827.  Current Fund Balance is $4,990,530 or 72% of Annual Debt Obligations. 7

Key Points Regarding Future Debt  Water/Wastewater, Subsidence, RDC and Civic Center Funds will continue to pay 100% of their portion of the debt.  Future debt issued for the Alternate Water Project should be paid with subsidence fees or water impact fees and consequently should not increase the City’s debt tax rate.  Other alternatives to strategically maintain the debt rate include: ◦Strategically schedule the issuance of debt to qualify as “Bank Qualified” - $10,000,000 per year. ◦Structure future debt to control impact of debt rate. ◦Maintain adequate fees for special purposes (subsidence fees) to continue to cover the associated costs. 8

RDC Debt Requirements – TOTAL OBLIGATIONS FYDebt RequirementFYDebt Requirement 2016$794, $76, $704, $11, $707, $266, $701, $267, $694, $264, $277, $74, $267, $23, $73,962 9 The RDC Debt is included in the Debt Service Fund. RDC is responsible for this portion of the Debt Service Fund obligations.

Water /Wastewater Debt 10

Summary of Water/Wastewater Debt  Not included in the Debt Service Fund.  Includes self-supporting debt such as revenue bonds, capital leases and State grant loans.  Total Water/Wastewater debt decreased by $667,258 from FY2015 to FY2016.  Three debt issues remain in W/WW Fund  SECO Loan – State of Texas  Bank of America – SECO projects  Texas Water Development Board – no interest loan 11

Debt in Water/Wastewater Fund 12 Total $4,435,643